As Tropical Storm Nate continued on its course toward the Gulf of Mexico on Friday, energy companies shut down offshore oil and gas platforms, while Louisiana braced for a potential hurricane.

Nate is forecast to strengthen as it enters the Gulf and develop into a hurricane by the time it reaches the northern Gulf Coast on Saturday evening, the National Hurricane Center said Friday. Hurricane and storm surge watches are in effect for southeastern Louisiana, including New Orleans, through the Mississippi-Alabama border.

The Gulf is home to nearly one-fifth of all U.S. oil output. Drillers who pump crude from offshore platforms have lately produced at record levels above 1.7 million barrels a day. The region already had to contend with Hurricane Harvey in August.

“The major difference between Harvey and Nate is that the trajectory of Nate brings it right through the heart of the U.S. Gulf of Mexico oil and gas producing region,” said Andy Lipow, president of Lipow Oil Associates.

BP and Chevron are ceasing production on all platforms in the Gulf of Mexico, Reuters reported. Royal Dutch Shell and Anadarko Petroleum dialed back activity, while Exxon Mobil, Statoil and others are withdrawing workers.

If Nate develops into a Category 2 or 3 hurricane, it could impact up to 80 percent of the Gulf’s output, Lipow forecast.

The storm also has the potential to affect about 15 percent of U.S. refining capacity in the New Orleans area, Mississippi and Alabama. The region’s biggest refineries include Exxon Mobil‘s Baton Rouge facility and Marathon Petroleum’s Garyville, Louisiana, plant, both capable of turning out more than 500,000 barrels a day.

Hurricane Harvey shut about a quarter of the country’s refining capacity along the Gulf Coast. Operations have almost returned to normal six weeks after Harvey pummeled southeastern Texas.

Flooding could put at risk infrastructure tied to the critical Colonial and Plantation pipelines, which move fuel from the Gulf Coast to the East Coast. That would be “bad news” for the Southeast and mid-Atlantic markets, Lipow says.

The Office of Homeland Security and Emergency Preparedness in Louisiana issued a state of emergency on Friday.

“High water is already a problem in many southeast Louisiana parishes,” the agency’s director, Jim Waskom, said. “High tides and easterly winds in recent days are impacting some areas ahead of the storm. Those conditions may worsen over the weekend.”

Gasoline prices should continue to drop to a national average of roughly $2.42 if Nate develops into a Category 1 Hurricane and passes through the region quickly, Lipow forecast. If the storm lingers, oil prices could tick up $1 or $2 a barrel, but the cost of gasoline should remain stable because the market is well supplied with fuel, he said.

A shutdown of the Southwest Pass, the entrance to the Mississippi River, would affect crude oil imports to New Orleans refineries, as well as gasoline, diesel and petroleum product shipments to Florida, Latin America and Europe, according to Lipow.

From Reuters

HOUSTON (Reuters) – Oil and natural gas operators began evacuating staff and halting production at U.S. Gulf of Mexico platforms on Thursday ahead of Tropical Storm Nate, the second storm in as many months to rattle the Gulf Coast energy corridor.

Nate, which has killed at least 10 people in Costa Rica and Nicaragua and caused intense rainfall, is forecast to scrape Honduras and Mexico, enter the Gulf and strengthen into a hurricane before making landfall this weekend in Louisiana, near several major refineries.

That path takes it through an area populated by offshore oil and natural gas platforms, which pump more than 1.6 million barrels of crude per day (bpd), about 17 percent of U.S. output, according to government data.

About 14.6 percent of U.S. Gulf oil production equaling 254,607 bpd was offline on Thursday, the U.S. Department of the Interior’s Bureau of Safety and Environmental Enforcement (BSEE) said. About 6.4 percent of natural gas output in the area also was shut.

Forecasts for Nate have shifted westward in the past 24 hours. The National Hurricane Center (NHC) had forecast on Wednesday that the storm would make landfall in the Florida panhandle.

BP Plc and Chevron Corp were shutting production at all Gulf platforms, while Royal Dutch Shell Plc and Anadarko Petroleum Corp suspended some production and some drilling activity in the Gulf.



The BSEE Hurricane Response Team continues to monitor Gulf of Mexico oil and gas activities.

NEW ORLEANS — Offshore oil and gas operators in the Gulf of Mexico are evacuating platforms and rigs in preparation for Tropical Storm Nate. The Bureau of Safety and Environmental Enforcement (BSEE) Hurricane Response Team is activated and monitoring the operators’ activities. The team will continue to work with offshore operators and other state and federal agencies until operations return to normal and the storm is no longer a threat to Gulf of Mexico oil and gas activities.

Based on data from offshore operator reports submitted as of 11:30 CDT today, personnel have been evacuated from a total of 66 production platforms, 8.96 percent of the 737 manned platforms in the Gulf of Mexico. Production platforms are the structures located offshore from which oil and natural gas are produced. Unlike drilling rigs, which typically move from location to location, production facilities remain in the same location throughout a project’s duration.

Personnel have been evacuated from five rigs (non-dynamically positioned (DP) rigs), equivalent to 20 percent of the 20 rigs of this type currently operating in the Gulf. Rigs can include several types of offshore drilling facilities including jackup rigs, platform rigs, all submersibles and moored semisubmersibles.

Eleven DP rig has moved off location out of the storm’s path as a precaution. This number represents 61 percent of the 18 DP rigs currently operating in the Gulf. DP rigs maintain their location while conducting well operations by using thrusters and propellers, the rigs are not moored to the seafloor; therefore, they can move off location in a relatively short time-frame. Personnel remain on-board and return to the location once the storm has passed.

As part of the evacuation process, personnel activate the applicable shut-in procedure, which can frequently be accomplished from a remote location. This involves closing the sub-surface safety valves located below the surface of the ocean floor to prevent the release of oil or gas. During previous hurricane seasons, the shut-in valves functioned 100 percent of the time, efficiently shutting in production from wells on the Outer Continental Shelf and protecting the marine and coastal environments. Shutting-in oil and gas production is a standard procedure conducted by industry for safety and environmental reasons.

From operator reports, it is estimated that approximately 71.1 percent of the current oil production in the Gulf of Mexico has been shut-in, which equates to 1,243,753 barrels of oil per day. It is also estimated that approximately 53.2 percent of the natural gas production, or 1,713.31 million cubic feet per day in the Gulf of Mexico has been shut-in. The production percentages are calculated using information submitted by offshore operators in daily reports. Shut-in production information included in these reports is based on the amount of oil and gas the operator expected to produce that day. The shut-in production figures therefore are estimates, which BSEE compares to historical production reports to ensure the estimates follow a logical pattern.

After the storm has passed, facilities will be inspected. Once all standard checks have been completed, production from undamaged facilities will be brought back on line immediately. Facilities sustaining damage may take longer to bring back on line. BSEE will continue to update the evacuation and shut-in statistics at 1:00 p.m. CDT each day as appropriate.

Total Percentage
of GOM
 66  8.96%
 5  25%
DP Rigs
 11  61%
Total shut-in Percentage of GOM Production
 1,243,753 (BOPD)  71.1%
 1,713.31 (MMCFD)  53.2%


This survey information is reflective of 28 companies’ reports as of 11:30 a.m. CDT today.


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